A Series of Increasingly Spurious Analogies

So I’ve been really torn about whether I should weigh in on the Dreamspinner thing because I do absolutely see both sides here. And, at the very least, I hope we can all agree that for some people not to be getting paid money they are owed by a company that owes them money is a non-ideal situation. I think a lot of acrimony that surrounds this discussion, though, comes down to whether you feel the specific circumstances that have led to some people not getting paid money they’re owed are understandable and forgivable, or utterly unethical. And the reason I decided to get involved in this is because, as far I can tell, where you stand on that spectrum depends partly, obviously, on your personal feelings about the publisher, but it also depends on your instinctive response to a deeply abstract question about economics. And if there’s one thing that I think is on-brand for this blog it’s over-analysing deeply abstract questions.

Analogy the first: you work for a mom and pop hardware shop, owned by Ma and Pa Nailerman. One day Ma Nailerman comes up to you and says, “Sorry kid, it’s been a bad month for hardware because people are being really careful and not breaking stuff at the moment so we’re going to have to put off paying you this month.” Now probably you wouldn’t be overjoyed because, well, you’re unlikely to be selling rivets for the love of it and you expect to get paid for it at some point. But you might also understand where Ma and Pa Nailerman are coming from. It’s tough being an independent hardware retailer these days, what with all the competition from Big Screw, and they’re good people, and they let you take an extra day off that one time for your cat’s birthday so you might suck it up. Besides, you know they’re good for it and if there ever comes a point when they’re not good for it they’ll have bigger problems than you will.

Of course, if it happened again, and if it kept happening, you might eventually decide that you have to move out of your minimum wage shop floor job and start looking for slightly more stable employment. But you wouldn’t think anything bad about the Nailermans. You’d know they did their best. You’d probably blame the economy. You might even blame whichever political party you didn’t vote for.

Analogy the second: you wait tables at Ma and Ma Cookerson’s Non-Heteronormative Family Diner. One day, Ma Cookerson takes you aside and says, “Sorry kid, it’s been a bad week in the family dining business so we can’t afford to pay you but we’ll make it up to you next time.” And, again, you’d probably roll with it, for all the same reasons you did last time, since the Cookersons are just as nice as the Nailermans. But suppose then she was to add, “Also, we’re keeping your tips.” And she’d quickly go on to explain that they’d write down how much you made in tips and they would add that to what they paid you back when they could afford to but you’d no longer be working with the assumption that whatever money a customer gave you was yours.

You might feel a little bit worse about that. What’s weird is, you might feel worse about that even if the next reduction in your income was the same as you had when you working for the Nailermans (after all, my understanding is that, in the US at least, minimum wage laws don’t apply to wait staff precisely because tips are factored into their income). What makes the difference here isn’t the amount of money that’s being withheld. It’s the understanding you’d previously had about how money was to be divided. When you get a job waiting tables (and, actually, this varies a lot, and the way tips are distributed is very different in different places but this is an analogy so stick with me) the deal is: what the customer pays for the food goes to the restaurant, and what they leave as a tip goes to you, and there is a meaningful difference between your employer withholding your wages because they can’t afford to release those funds and them taking away money that, by your understanding of the terms of your employment, should already be yours.

Analogy the third: after your understandable but financially detrimental experiences in various ends of the customer service industry you decide to start growing lemons. Why you decide to do this, I’m not sure. Just go with it. You make a deal with the aptly named Mr Lemonseller. He offers you the following bargain: you will grow the lemons, and he will sell the lemons, and you will split the proceeds from the sale of the lemons 30/70. And this works fine for a while. But then one day Mr Lemonseller comes back and tells you that he has sold all of the lemons but his transport and accommodation costs were much higher than expected due to fluctuating oil prices and an unforeseen Ariana Grande concert. Thus, he informs you, that although he did sell the lemons, he had to spend some of your half of the lemon money to cover his expenses.

This you might reasonably be much more pissed off about. Because you had a very specific deal with this man. You do your bit of your job (growing and producing the lemons), he does his bit of the job (transporting and selling the lemons), and it’s up to each of you individually to make your bits of that process worth it. You don’t, after all, get to ask Mr Lemonseller to give you more money just because the price of fertiliser went up or the state has introduced a new tax on the colour yellow. Effectively Mr Lemonseller has exploited the fact that, because he is the one who handles the money, it is much easier for him to pass his costs onto you than it is for you to pass your costs onto him. Now it’s possible that you’ll still be okay with this deal. You might really like Mr Lemonseller. You might even find that you make more money working with Mr Lemonseller, despite the fact that he occasionally dips into your cut of the lemon money, than you would with somebody else. Because maybe Mr Lemonseller is fantastically good at selling lemons. But if that’s the case, you’d probably be more comfortable re-negotiating your deal so that Mr Lemonseller is upfront about what percentage of the lemon money he actually takes rather than just accepting a situation where sometimes you don’t get money that definitely exists and you are definitely owed.

Now I appreciate that the way I’ve structured this rhetorical device deliberately leads the reader to see the situation under discussion as more like the last example then the first. And I do happen to believe that the Mr Lemonseller model is a better way to think about the relationship between an author and a publisher than the hardware store or the hybrid-model of wait staff salary plus tips. But I also understand that there are people for whom the first analogy is the most apposite one. There are people for whom working for Dreamspinner is like working for Ma and Pa Nailerman who are currently having trouble because Amazon suddenly starting offering customers unlimited hammers. I do get that. I really do.

But having thought about this, as I usually do way too much, the thing that keeps coming back to me about the Lemons Analogy is the fertiliser / travel costs thing. If you work a job for a salary there is an understanding that you are strongly insulated from the uncertainties inherent in the business you work for. And, perhaps paradoxically, that makes it easier to accept the rare occasions on which the uncertainties inherent in the business impact you – because you know for it to have got to that point things must have gone very, very badly. But if someone is selling your lemons (or, obviously, in this case your books) then you are already assuming much more of the risk of their doing business. You’re effectively more of an investor than an employee. If Mr Lemonseller breaks his ankle and can’t sell lemons for three months, that’s your income gone. And so if Mr Lemonseller also then asks you to help cover his medical fees you’ve effectively been double impacted by his misfortune. And, maybe, you are better off paying those medical fees in order to keep Mr Lemonseller in the lemon-selling business because otherwise you’ve got no way to sell your lemons but is it fair for Mr Lemonseller to be asking you to do that in the first place?

And, again, I should stress that for some people the answer is yes. Some people will be profoundly grateful to Mr Lemonseller for getting them started in lemon-selling. But from a strict standpoint of business ethics your deal with Mr Lemonseller is very clear: you get 30% of the money, and he gets 70% the money, and he does not get to decide what’s done with your 30% of the money. Even if the thing he’s doing is going to make him better at selling lemons in the long run. Because if Mr Lemonseller is allowed to take some of your lemon money and re-invest it in his lemon business he’s effectively asking you to assume risks your never signed up to assume for rewards that will benefit you substantially less than they’ll benefit him. If he takes your lemon money and uses it to buy cantaloupes, sells the cantaloupes at a profit, then uses the cantaloupe money to invest in a better fruit stall that might long-term lead to your selling more lemons, and therefore getting a larger lemon-based income, but short-term you had to subsidise his capital investment. And you, after all, do not own the fruit stall.

On top of which, once again, you have no means to treat him equivalently. If you break your ankle, and therefore cannot produce any lemons, he has to get his lemons from somewhere else but you can’t make him give you some of the money he makes from selling someone else’s lemons to cover your medical expenses. If you want to buy a deluxe lemon-harvesting machine you can’t unilaterally do that with his percentage of the lemon money because you never have possession of it. So he can make investments with your money, but you can’t make investments with his money. And, to a lot of people, the only ethical way for this relationship to be managed that doesn’t create genuine moral hazards for the Mr Lemonsellers of the world—who could be very easily tempted to re-invest your lemon money in the reasonable certainty that they’ll make it back before you notice it’s gone—is to have a rigorous system in place to make sure that cannot happen.

The thing is, I completely see why some people view their relationship with a publisher differently. Especially if you’re used to working a more conventional job (and, frankly, virtually everybody is more familiar with conventional jobs than they are with weird, rights-based industries unless you’ve always been a novelist, and you’re married to a novelist, and your parents are novelists) it’s natural to think of the company who sends you money every few months as your employer and yourself as effectively their employee. But that isn’t actually an author’s relationship with their publisher. You have a deal with them, in which you make stuff, and they sell it, giving you a share of the profits. And, by my very limited understanding of contractual law, those profits become yours at the point of sale.

For some people, this doesn’t matter. Some people are perfectly comfortable seeing their royalties as a sort of variable salary that the company pays from an undifferentiated pot of money, and they accept that if the pot is running low, not everybody is going to get to take money out of it every month. But for other people the existence of the pot of money system highlights a structural flaw in the way the company has hitherto set up its finances. Just as I would expect Mr Lemonseller on selling my lemons to set aside my part of the money lemon, and not touch it because it’s not actually his, just as I would expect the Cookerson’s to let me keep my tips even if they couldn’t afford to pay me my salary, I would, on reflection, expect a publisher to do the same with my royalties. Because the deal we have is not that I get given a variable amount of money depending on how well the publisher is doing at the moment, the deal is that I get a certain percentage of the revenue generated from the sales of a product that I have produced.

I’m in kind of an odd position in that I find myself having quite a strong opinion about a contentious current issue based entirely on my opinions about a completely abstract issue that I didn’t even consider until the contentious issue cropped up. The truth is, that payments, of any kind, are rather like, I mean pick whatever example leaps out to you because there are hundreds, many of them biological, in that you don’t really notice until it stops working. I think what I’m groping towards here is that I now hold quite firmly to the position that it is correct practice for publishers to earmark royalties and not touch them (see above: re Mr Lemonseller and his moral hazards) and that a publisher not doing this would be a problem even if it was still managing to pay its authors. And I suspect part of the problem here is that if you don’t agree with that principle, then the current state of affairs looks very different because there is a huge and important distinction between an unfortunate situation that ultimately couldn’t have been avoided, and an unfortunate situation that should never have been possible.

Before I wrap up and sign off, there’s one more way of articulating this that might help people see where those of us who have a problem with the structures that have led to all these difficulties are coming from. Because, on reflection, you can make a case that the deal an author has with their publisher is essentially the same as the deal an author has with their agent. Which is to say, you sell my shit, and we split the money. Now, of course, in the case of an author-agent relationship the split is very much more in the author’s favour, but if my agent turned round to me and told me that they’d kept my share of the royalties this time round for any reason I would, meaning no disrespect, lose my motherfucking shit. And I don’t think single person would have a problem with that because it makes intuitive sense that the money I receive from my agent is definitely my money and not only does my agent not have the right to withhold a penny of it they have a professional obligation to set it aside to give it to me within the timeframe we’ve agreed upon.

But, or some reason, when it’s the same situation with a publisher it all feels … wobblier somehow, probably because it’s no longer an individual lemon seller you’re dealing with, so much as a distributed lemon-selling network.  From my perspective, though, the principle is the same. You may, of course, feel differently about your lemons and that’s fine, this is a complex situation and there are no easy answers, especially when you get into questions of how people’s responses to the practices of a business impact people whose livelihoods depend on that business. I mean, ultimately we all care about lemons, and are just trying to make lemonade as best we can.


30 Responses to A Series of Increasingly Spurious Analogies

  1. The most recent wrinkle I’m seeing, and the source of most of the current vitriol (at least in my circles) is the idea that the various people who sell lemons through Mr. Lemonseller shouldn’t be publicly discussing the issues with payments. And I think this is another debate that arises from different perspectives…

    If you think Mr. Lemonseller is having a temporary glitch (perhaps one of the mythical accounting issues?) and is very likely to get back on his feet in short order, then you don’t see the need for public discussion AND you don’t want anyone to say anything that might decrease public confidence in Lemonseller’s goods, thus making it more difficult for him to get back on his feet. But if you have more serious concerns about the Lemonseller future, you think it’s important to share your concerns and make sure everyone’s aware of the situation and doing what they can to mitigate the harm they suffer.

    Add in an extra wrinkle of some lemon suppliers being paid while others aren’t being paid, with no clearly expressed rationale for this difference, and things get even muddier.

    Yuck. It’s not a fun situation.

    • As you say, it’s not fun. And while in general I err on the side of not airing your dirty laundry in public, I think the point at which you are not being paid money you are owed is the point at which you have a grievance it is legitimate to state publicly. No matter how nice it is to work for the Nailermans, if someone asks you if they’re good employers and you don’t say “some months they don’t have enough money to pay me” you are genuinely doing those people a disservice. I think issues between authors and publishers arise all the time, and usually its incredibly subjective. This one, to me, kind of isn’t.

  2. Gwen says:

    The upshot: don’t fuck with authors. They will express, thoroughly and eloquently, why not.

  3. Kelly says:

    I’m not in the industry, so this is a completely uneducated observation:

    When this (seemingly to me) similar situation occurs in the financial industry, isn’t it a ponzi scheme??

    I love you authors and hope issues get sorted quickly and ethically since I count on you all for my sanity ❤️

    • I think that might genuinely be a slightly unfair characterisation. My understanding is that a ponzi scheme is deliberately fraudulent and this seems like its more a matter of questionable practices. It’s not that Mr Lemonseller isn’t selling the lemons, it’s just he’s trying to reinvest into his business with money that isn’t technically his.

      I suppose if you take the line that the DSP authors who are being paid are effectively being paid with money that belongs to other authors then, yes, that does look a bit ponzi-ish round the edges. But I think that’s a situation that’s arisen because they’ve treated their money as coming from one big undifferentiated pool, rather than because they’ve made a deliberate attempt to rip people off.

  4. Wendy Loveridge says:

    I had a similar situation as a business owner (children’s nursery). My contract with the parent of a child stated ‘payment one month’ in advance. I had payed my staff, bought food (for said child and the other fifty children) kept my nursery warm and safe, and payed all my bills. Builder parent stated he couldn’t pay for the care of his child as he hadn’t been payed. By now builder parent was two months in arrears. I asked him how he fed his family at home if he hadn’t been paid and he told me he’d been to Waitrose (not even bloody Lidl’s!) – “did they give you two months to pay?” I asked. “Of course not” stated builder indignantly. So obviously we – my staff and I – were way down the pecking order in terms of who was important enough to be payed. I was pissed off and I don’t blame authors for feeling the same when their work is done and has actually been sold. I call it theft.

    • willaful says:

      I kind of feel like that aspect is missing in all of these analogies. People who work for a living generally need their paychecks. I don’t necessarily see Mr. Lemonseller as more wrong than anyone else — they’re *all* wrong.

      • That’s a good point. There’s a certain amount of privilege involved in being able to say, “Stay quiet, everything will be okay in another few months, don’t worry about it.”

        Some authors can afford to get by without their regular income for a quarter or more.

        Others can’t.

        For the authors who can’t, it doesn’t really MATTER why the payments aren’t coming. The lack of payments is catastrophic.

      • This might sound weird, but I deliberately avoided the question of whether people needed the money or not. Because while, obviously, its easy for those of us with more lucrative jobs to forget how much some people really need to get paid when they’re expecting it that’s not actually what makes the ethical difference here.

        I absolutely agree that the Nailermans not paying their employee is totally not okay and their employee is probably screwed – but it would only be possible for things to have reached that state if the Nailermans were themselves also screwed. I you owe someone money and legitimately can’t afford to pay it, then that sucks for them but it doesn’t necessarily imply you have behaved unethically (unless you were deliberately negligent, or misrepresented yourself when you incurred the original debt).

        By contrast, if the deal you have with someone is that you will undertake a joint venture and split the revue, but the person in charge of handling the money treats the other person’s share of the revenue as effectively their money for as long as they’re hanging onto it that does, in fact, constitute a serious ethical problem, irrespective of how much the other person needs the income.

        • I think the issue here is the “legitimately can’t afford to pay it” aspect.

          I don’t know enough about either publishing OR bookkeeping to say for sure, but I’ve seen a lot of others say that it’s an absolute ethical expectation for authors’ shares of royalties to be kept separate from general revenues of the company. The royalties are, essentially, being held in trust for the authors and should never be touched.

          If this is an accurate representation of how publishing bookkeeping should work, then there should never be a time when a publisher can’t afford to pay royalties, right? Because the publisher is only ever expected to pay royalties on moneys received, and the publisher should have been keeping these amounts separate and protected.

          Again, I don’t know how entrenched this approach is in publishing – I don’t know if it’s the absolute minimal standard of behaviour or if it’s just a nice idea. But if it IS the expected standard of behaviour, then there’s something seriously wrong as soon as the company is legitimately unable to pay.

        • Not_comfortable_saying says:

          The issue above, I think, that Kate trying to say above with this:

          ” There’s a certain amount of privilege involved in being able to say, “Stay quiet, everything will be okay in another few months, don’t worry about it.” ”

          Wasn’t so much that it determined whether or not what DsP did was unethical, but rather that it’s easier for those who don’t depend on the money to keep quiet, not rock the boat, stay loyal, etc. Whereas for those who depend on the money to pay bills are a bit more anxious to start a fuss (justifiably so) when they don’t get paid. And, at that point (as in Mr. Lemonseller’s example above) after the first quarter where things are delayed, after the first (or second or even third) time things were late because of a “malfunction,” it stands to reason people are going to start making a bit of noise. Those who don’t depend on it can afford to not make noise. It’s a place of privilege to say “be quiet for a while, just let things work out.” Because the electric company doesn’t care why I can’t pay it. My ISP isn’t going to keep my internet on if I don’t send them money. I shouldn’t have to be quiet when I’m not getting paid, either.

  5. Lawless says:

    Royalties should be treated like tax withholdings and other paycheck deductions. There’s a reason the latter are called trust fund payments: they’re handled by the employer but it’s the employee’s money, not the employer’s.

    Any business activity that requires the use of money that doesn’t belong to the business is unethical and no different morally from out and out embezzlement. So using author royalties to fund an expansion either means a lack of ethics, if planned and deliberate, or poor business practices, if unplanned and accidental. Eventually, however, continuation of such practices without amelioration, and holding certain favored people harmless, becomes planned and deliberate.

    • I think you’re absolutely right, but I think the problem is that authors tend to treat royalties the way people with more conventional jobs tend to treat tax withholding and paycheck deductions in practice. Which is, not thinking about them that much.

      My understanding is that this actually came to bite the current administration in the arse a little bit during the last tax rebate season because something something changed the way witholdings work something something meaning people had been taxed less over the previous year but also got a much smaller tax rebate in whatever the hell tax rebate season is (I’m not American). So even though people were actually in some ways better off they still felt that they were worse off.

      • Tibicina says:

        Tax Rebate season is January through Mid April. And part of the problem was not just that they were getting smaller tax rebates (which many people treat as sort of ‘fun money’), but that they were often left actually owing taxes, which people had not budgeted for because they hadn’t realized what the impact would be.

        (Add in some *serious* shifts in the way that a number of things were calculated and what deductions were allowed which meant that even a lot of the tax professionals were kind of scrambling because they did not get guidance about how this all would work out to the tax professionals until mid-November and… yeah, it was a problem.)

  6. Kamala S Englin says:

    If Mr Lemonseller is so keen on expanding his fruit empire, he should create optional investment opportunities for the lemon growers. The lemon growers’ cuts are their own to do with as they please. Isn’t this sort of what happened in the Great Depression with the run on banks?

    • Pretty much this. And given how supportive some people are of Dreamspinner they could actually ask for people to voluntarily forgo royalties and I suspect some people would actually go for it. Although, from my cursory observations, the people displaying the most loyalty to the company tend also to be the ones who have actually been paid.

  7. Nope says:

    DSP have spent years, and a fortune earned for them by their authors:

    * Turning their authors into a cult by sending them on ‘retreats’ and including them in DSP-only newsletters and social media groups, then ‘excommunicating’ anyone who leaves DSP

    * Throwing money at incredibly expensive sponsorship and swag at events that aren’t even genre-appropriate

    * Subtly stirring up hate against indie authors behind closed doors or in the privacy of DSP ‘retreats’, claiming that they’re only in it for the money. Spoiler: DSP are in it for the money

    * Inferring that the evil money-hungry indies are responsible for DSP’s own fiscal mis-management when DSP should have been putting author royalties in a protected account away from company finances

    DSP prey on authors’ imposter syndrome and the belief many have that you must have a gatekeeper tell you that your work is good enough to be published. They also rely on middle-class authors whose incomes elsewhere sustain them and for whom a fluctuating writing income is okay because they already paid off their mortgages or don’t have children.

    That imposter syndrome is why some still don’t have the courage to speak the truth. They’re so afraid that if they say something bad about DSP they’ll get excommunicated from the cult and never be published again.

    To quote Shonda Rhimes: “Why do reporters always say writers were “lured”? Like we’re children following a trail of candy. I created a $2B+ revenue stream for a major Corp with my imagination. I do not follow trails of candy. I am the candy.”

    It’s about time authors realised they’re the candy.

    • I should say straight up that I have no real insight into any of this – although if it’s something you’ve directly experienced, then, I’m sorry it’s been like that for you.

      I think there’s a thing in small businesses in general where you push really hard for buy-in and that can sometimes get a bit culty. And I do have a very strict rule that I always assume businesses are essentially impersonal, profit-making organisations and will behave as such and it’s appropriate to behave towards them as if that’s what they are. Because, well, that does tend to be how it works. And that’s not just about publishing, that’s about life.

      But when you are a new author it is really hard not to emotionally invest in the first company that publishes you.

  8. dee says:

    First of all, as someone with a background in finances I find your examples very cool. Pretty easy to understand!

    Second, if I was an author I would probably consider not getting paid once is a fluke. If it happened more often I’d consider it a mismanagement on the publisher’s part and I’d most likely part with them. Why? Because they should represent me and help me with the stuff I don’t want to take care of myself and not cause me any grief.

    As a reader something like this always unnerves me. First and foremost I don’t care about a particular publisher* but about an author I like and want to support. So, if I hear about something like this I am torn. On the one hand I want to support authors by buying their books. But then, if they don’t get paid, should I buy the books I’m interest in at all?

    *In some cases I do look where books were published, e.g. if the books I’ve read from them are constantly above average (comes in handy when looking for new authors) or if they serve a niche I am interested in.

    • I think that’s how a lot of people think about it instinctively–one missed payment might be understandable but more than that is pushing it. But what’s interesting is that it’s not unreasonable to take a harder line. My understanding is that the standard practice in the industry is to ringfence royalties so it should never be possible to miss so much as a single payment (just like if I promise to pay you half of what I got from selling your lemons, it shouldn’t be possible for me to not have that half to pay you).

      In terms of readers and publishers, with my reader hat on I don’t think I’m interested in publishers (I’m interested in books). I couldn’t imagine buying something because it was published by X publisher or not buying something because it was published by Y publisher unless Y publisher had done something super shady.

  9. L. says:

    The key question is, what does the contract say?

    In the first case, I suppose, there’s only an oral agreement. If one party doesn’t stick to it, then it’s up to the other party whether to keep to it onesidedly with the hope that things will get better, or leave. No written contract means no guarantees and no sanctions for breaching it but it also gives you the full flexibility on your side whether you want to continue once conditions have changed.

    In the second case, there’s an addition of common business practice that the waiter usually keeps the tips. So again, it’s up to the employee, but I’d consider finding another employer whose way of business conduct is more aligned with the majority of the industry.

    In the third case, I presume there is a written contract. So now it’s getting interesting.

    a. Does the contract say that the 30/70 rule applies to the net earnings? (sales minus fixed costs minus variable costs) Then the business owner has the right to reduce the 30% share once the net earnings shrink. Whatever the reason is, whether the owner or a hired manager makes wrong investment decisions so the variable costs get unexpectedly high while the sales revenue stays the same, it doesn’t matter because the contract is still fulfilled.

    b. Does the 30/70 rule refers to the lemon/book/whatever price? (Let’s assume the prices are not market-driven and fixed. Otherwise, a good contract should also state how the price is determined) Then it’s definitely a breach of contract. Again, a good contract should state the consequences of that course of action aka sanctions and again, it doesn’t matter what has led to that (bad business practice or whatever). There is no such thing as “fairness” in business, there can be no fair prices or fair investments, but only what two parties voluntarily agree upon.

    • A little behind-the-curtain thing here: with books it isn’t strictly either of those because publishers aren’t end sellers. Effectively the way it is understood to work (from my limited understanding, I mostly just hope it all gets sorted out on the back end) the author’s share is taken out of whatever gets paid to the publisher after the actual sellers (often Amazon) have taken their cut. Similarly if a book goes on sale you get a percentage of the sale price not the list price.

      I think the issue here is that what *doesn’t* seem to be explicitly contracted but is a matter of strongly understood business norms is the question of what the publisher is allowed to do with the money it receives but has not yet paid to the author. Generally contracts just specify “a royalty” and a schedule of payments but they don’t state how that royalty will be held prior to its being paid.

      • L. says:

        ***I think the issue here is that what *doesn’t* seem to be explicitly contracted but is a matter of strongly understood business norms is the question of what the publisher is allowed to do with the money it receives but has not yet paid to the author. Generally contracts just specify “a royalty” and a schedule of payments but they don’t state how that royalty will be held prior to its being paid.***

        Well, actually I cannot fully agree that that is a strongly understood business norm (maybe it is though and I am just oblivious). In my opinion, it is for the publishing management to decide and authors under contract are not managers. The royalties become theirs after they are transferred to them, not before. You cannot allocate the specific amount of money on somebody else’s bank account to you, your fellow authors or whomever, even if it is exactly what’s transferred to you later on.

        Having said that, I must admit there are other things that can play a major role in the issue. If you’re the cash cow of the publisher, you obviously have a stronger position as a negotiator and could theoretically influence the publisher’s decisions under the threat that you can terminate your contracts and withdraw your books. Also, you can, say, renegotiate your contracts or introduce a clause in a new one, that you are to be consulted while investing (although I really can’t imagine why the publisher would agree to that).

        And of course, there are reputational risks. If a significant number of authors disagree with the investment policy of the publishing agency and go public about that, the publisher might reconsider what they invest in (because of the public pressure, not because they are obliged to).

  10. E Turner says:

    A couple points for expanding the analogy that didn’t seem to be included in supporting the publisher’s side, if I may? Not to argue against the principle that the publisher should indeed pay the author royalties owed and should have practices and systems in place so they don’t touch it. I believe that they absolutely should, bottom line, for the reasons given. But to clarify some more of the complexity?

    Point 1. Doesn’t the publisher spend their own money on the book before there’s any sales? For instance, on Carina’s FAQs, it says they employ freelance editors, and they take care of the cover art, so maybe that’s standard … and presumably the publisher pays both editors and artists as work is completed which would be prior to the book release. If that’s correct, then in the analogy, Mr Lemonseller does contribute money upfront to help the lemon crop grow, therefore assumes some risk too. Though still not as much as the lemon grower placing their trust in Mr Lemonseller once the money earned comes in.

    Point 2. There’s a comment on Goodreads for this blog post that a Dreamspinner author says Dreamspinner was not paid themselves. No idea if it’s true, but for argument’s sake. Say Mr Lemonseller ethically used their own money recently for expansion into South America as well as the market for lemon meringue pie. But then a major vendor (almighty All Fruits?) is late paying them for a significant amount. Then maybe they face a difficult choice until that money comes in. Because with unexpected possibly extensive delays in money owed (emergency funds only go so far) … and if Point 1 is true and they have people to pay immediately (internal staff as well as the distributors) for their current ‘crop’ in progress … how to cope with the shortfall?

    Ultimately, it doesn’t change the principle, coping technically shouldn’t come from the author’s portion of the money received, it should be considered untouchable and paid regardless of when the money leaves the publisher’s account to go to the author. But if the principled choice meant shutting down immediately … perchance it’s still considered bad management to let it get to that point, even if (in the abstract argument) they do their best to plan and ethically had the differentiated pot. Just seems sad and difficult and frustrating for the authors that on the one hand there’s ‘not being paid!’ and on the other there’s losing Mr Lemonseller in the business, and facing selling out of their own lemonade stands or hoping the remaining Ms Sellslemons is more ethical, has good resources, and stays in business longterm.

    • Obviously the analogy falls apart eventually because books aren’t lemons, and the role of a publisher isn’t just the role of somebody reselling a product somebody else has wholly produced, there is some involvement in the middle where both sides have input.

      I think to me the thing is that if a publisher hires a freelance editor, that’s something they do at their end, and if I hire one that’s something I do at my end, and neither of us gets to pay for an editor using the other person’s share of the proceeds.

      As for not having been paid–I actually don’t think that’s strictly relevant. If Mr Lemonseller takes my lemons and gives them to a lemon distributor with the understanding that the the distributor will take 30% of the sale price and whatever comes back to Mr Lemonseller will be split with me 70-30 as usual, then Mr Lemonseller doesn’t owe me anything until he gets paid. It’s fine for a publisher to not pay you money that they never got, but I think that’s different from what seems to be happening here.

      Basically as I understand it the situation you describe can only happen if the money coming in is all going into one big pot, rather than royalties being ringfenced. If AllFruits hasn’t paid for its lemons, then we have sold zero lemons and Mr Lemonseller doesn’t owe me any money yet. If Mr Lemonseller sold some of my lemons, but then spent my share of the lemon money expecting to be able to pay me back with the money he’d get from AllFruits, then that’s a very different situation.

  11. Curly says:

    Nice set of analogies, but does anyone have a link where the issue is set out in plain English? I’m not an author, I’m a dedicated consumer, but I follow a lot of authors on Twitter. The twitter format does not lend itself to nuance. All I really want to know is DSP going the same way as so many other retailers? When I started to see the drama, I went and made sure the hundreds of books I’d purchased were all downloaded. As a consumer, this drama is making me quite cautious buying from DSP, and if that behavior is repeated across a percentage of clients, then there will be an impact. Authors are probably right to be outraged, but balance it against scaring away customers.

    • I’m afraid I have no insight into the overall health of Dreamspinner’s business. When buying from any small retailer I would always recommend backing up your collection but beyond that I’m afraid I really can’t be any more help. Really sorry.

  12. Q says:

    From what I gathered reading some of the discussion on Twitter, changing a publisher/going indie with your books can be a very expensive and time-consuming prospect. So I’m imagining that there are authors with a good following and enough clout (or prospects of going to a different publisher) who can afford to say something, authors who can afford to do without and might or might not say anything depending on how much they like the publisher, and those who can’t really afford it but don’t see the possibility of going indie or switching publishers might stay quiet, hoping that the publisher will straighten up its act so that they finally get paid. The last type might be upset at those rocking the boat because they fear that it might cause more financial trouble, therefore reducing their chances of eventually getting the money they are owed and desperately need. Then there are probably some who really need the money and hope that speaking out will force the publisher to pay them. All in all, its a bad situation, and I’m not a lawyer but can imagine that this is not simply an ethical or responsibility problem, but could be a legal one as well.

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